Westmont Corporation uses a comprehensive budgeting system for planning and control purposes. While departmental supervisors are happy with the system, the factory manager is not. A report for the company's Assembly Department for March follows: Machine-hours Variable costs: Supplies Scrap Indirect materials Fixed costs: Wages and salaries Equipment depreciation Total cost Assembly Department Cost Report For the Month Ended March 31 Actual Results 25,000 $6,600 19,600 61,400 66,700 94,000 $ 248,300 Planning Budget 30,000 $ 7,200 21,000 70,500 64,000 94,000 $ 256,700 Variances $ 600 F 1,400 F 9,100 F 2,700 U 0 $ 8,400 F After receiving this report, the supervisor of the Assembly Department stated, "These reports are super. It makes me feel good to see how well things are going in my department. I can't understand why those people upstairs complain so much about the reports." For the last several years, the company's marketing department chronically failed to meet the sales goals expressed in the company's monthly budgets. Required: 1. The company's president is uneasy about the cost reports, identify at least two reasons. 2. What kind of reports should be used to give better insight into how well departmental supervisors are controlling costs? 3. Complete the new performance report for the quarter, based on Flexible Budget Performance approach. 4. Were costs well controlled in March?
Westmont Corporation uses a comprehensive budgeting system for planning and control purposes. While departmental supervisors are happy with the system, the factory manager is not. A report for the company's Assembly Department for March follows: Machine-hours Variable costs: Supplies Scrap Indirect materials Fixed costs: Wages and salaries Equipment depreciation Total cost Assembly Department Cost Report For the Month Ended March 31 Actual Results 25,000 $6,600 19,600 61,400 66,700 94,000 $ 248,300 Planning Budget 30,000 $ 7,200 21,000 70,500 64,000 94,000 $ 256,700 Variances $ 600 F 1,400 F 9,100 F 2,700 U 0 $ 8,400 F After receiving this report, the supervisor of the Assembly Department stated, "These reports are super. It makes me feel good to see how well things are going in my department. I can't understand why those people upstairs complain so much about the reports." For the last several years, the company's marketing department chronically failed to meet the sales goals expressed in the company's monthly budgets. Required: 1. The company's president is uneasy about the cost reports, identify at least two reasons. 2. What kind of reports should be used to give better insight into how well departmental supervisors are controlling costs? 3. Complete the new performance report for the quarter, based on Flexible Budget Performance approach. 4. Were costs well controlled in March?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Transcribed Image Text:Westmont Corporation uses a comprehensive budgeting system for planning and control purposes. While departmental supervisors
are happy with the system, the factory manager is not.
A report for the company's Assembly Department for March follows:
Machine-hours
Variable costs:
Supplies
Scrap
Indirect materials
Fixed costs:
Wages and salaries
Equipment depreciation
Total cost
Assembly Department
Cost Report
For the Month Ended March 31
Actual
Results
25,000
Required 1
$ 6,600
19,600
61,400
66,700
94,000
$ 248,300
Required 2 Required 3
Planning
Budget
30,000
$ 7,200
21,000
70,500
64,000
94,000
$ 256,700
Required 4
After receiving this report, the supervisor of the Assembly Department stated, "These reports are super. It makes me feel good to see
how well things are going in my department. I can't understand why those people upstairs complain so much about the reports."
Variances
For the last several years, the company's marketing department chronically failed to meet the sales goals expressed in the company's
monthly budgets.
Complete this question by entering your answers in the tabs below.
$600 F
1,400 F
9,100 F
2,700 U
0
$ 8,400 F
Required:
1. The company's president is uneasy about the cost reports, identify at least two reasons.
2. What kind of reports should be used to give better insight into how well departmental supervisors are controlling costs?
3. Complete the new performance report for the quarter, based on Flexible Budget Performance approach.
4. Were costs well controlled in March?
The company's president is uneasy about the cost reports, identify at least two reasons.
Note: Select "X" if the item is one of the reasons.
Cost reports are ineffective since budgeted costs at one level of activity are compared to actual costs
at another level of activity.
Cost reports show whether fixed costs are controlled and do not show whether variable costs are
controlled.
Cost reports are effective since budgeted costs at one level of activity are compared to actual costs at
another level of activity.
Cost reports show whether fixed costs and variable costs are controlled.
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